Why You Must File Your Tax Return by April 18 -- Even if You Can't Pay Your Tax Bill

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  • When you're late filing a tax return and you're due a refund, there's no financial penalty.
  • When you're late with a return and you owe the IRS money, the penalties can be huge.
  • If you can't afford to pay your tax bill all at once, contact the IRS to get on a payment plan. 

Failing to file could have serious financial consequences.

Taxes are due this year on April 18, which means if you're reading this right now, you still have plenty of time to get your return completed by the deadline. But what if you're working on your taxes and already see that you're going to owe the IRS money? Worse yet, what if you know with certainty that there's not enough money in your checking account to cover that bill, and you're also not in a position to magically scrounge up the money by April 18?

In that case, you may be inclined to wait on filing your tax return. After all, what's the point of filing your return on time if you can't pay on time?

But actually, being late with a tax return could have major financial consequences when you owe the IRS money. So it's important to get your return in by April 18 even if you'll need to make arrangements for paying your tax bill over time.

Don't be late with your tax return

When you're due a refund from the IRS, there's no penalty for submitting a tax return after the filing deadline. The reason is that the IRS can't process your refund until your return comes in. And so by delaying your return, you're only delaying your refund. 

That hurts you, not the IRS, because it gets to hang onto your money even longer. So the IRS doesn't deal you a double blow by penalizing you for tardiness.

But when you owe the IRS money from the previous tax year, it's a very different situation. In that case, if you're late filing your tax return, you'll be assessed a failure-to-file penalty that's equal to 5% of your unpaid tax bill per month or partial month your return is late, up to 25%. That's separate from the interest and penalties you're apt to accrue for being late with your tax payment itself. 

So even if you know you won't be able to pay your tax bill by April 18, it's still essential that you get your tax return in by that deadline. And if you can't finish your return in time, request a tax extension.

A tax extension won't give you extra time to pay your tax bill. But it will give you extra time to submit your tax return -- an extra six months, in fact. So if you owe the IRS money and file a tax extension, and then submit your tax return in, say, June or July, you won't face that costly failure-to-file penalty.

How to tackle an overwhelming tax bill

You might end up owing the IRS a bunch of money from 2022. If that's the case, and there's no way you can come up with the cash by mid-April, don't panic. The IRS is generally really good about letting tax-filers pay their tax bills over time. 

All you need to do is reach out and ask to get on an installment plan, which will allow you to pay off your tax debt gradually. As long as you make your payments under that plan, you won't be considered delinquent by the IRS. 

This doesn't mean you'll avoid interest and penalties on your tax bill, as those will still apply. But that way, the IRS won't attempt to garnish your wages for the non-payment of taxes -- something the agency has every right to do to people who ignore their tax debts and don't make any effort to pay them.

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